Patterson Companies added to Forbes' list of America's 100 Most Trustworthy Companies for the third year in a row
After analyzing more than 8,000 publicly-traded companies, Forbes has published its list of Americas 100 Most Trustworthy Companies for 2014, and Patterson Dental is one of only two healthcare equipment and services companies listed.
April 22, 2014
After analyzing more than 8,000 publicly-traded companies, Forbes has published its list of Americas 100 Most Trustworthy Companies for 2014, and Patterson Companies is one of only two healthcare equipment and services companies listed. (The other company is ICU Medical, Incorporated, which is on the list for the first time this year.)
The list, which resulted from corporations that experienced financial collapse as a result of “outright fraud” (think Enron), grades companies on their credibility. The most credible companies are transparent, consistent, and accurate with reporting, whether it looks bad for investors or not.
GMI Ratings, the company that provides Forbes with the list, reviews several factors to determine the top 100: accounting and governance behaviors (high-risk events, revenue and expense recognition methods, SEC actions, and bankruptcy risk) and corporate governance events, such as accounting issues, late filings, and cases in which the chairman is also CEO.
This last quality is interesting to note for Patterson, as the president, CEO, and chairman of Patterson Companies is one man: Scott P. Anderson.
“When the CEO is chairman, that’s fairly meaningless, but when the CEO is also chairman, and the incentive compensation is higher than every peer group member, he’s controlling his own compensation, and that’s a flag,” said James Kaplan, director of GMI Ratings, in an interview with Forbes.
This hasn’t proved to be a problem for Patterson in the past, which had operated under the direction of one man as president, CEO, and chairman for 18 years from the mid-1980s to the early 2000s.
"GMI becomes more concerned when that combined role is compensated well outside (above) others within the company’s peer group. ...[T]hat could be an indicator that the combined chairman/CEO role is exerting too much influence over the board therein creating a potential negative implication on the governance of the business and the interests of the shareholders," said R. Stephen Armstrong, executive vice president and CFO of Patterson Companies. "From Patterson’s perspective, we believe that our compensation structure is very conservative and below market medians and our peer group. That being the case, GMI would probably not view our combined chairman/CEO role as concerning."
Armstrong is on to something: Kaplan wouldn’t be too worried about the corporate trinity alone. “None of [the behaviors] are smoking guns, but when a company has 15 or 16 pieces of forensic evidence, that becomes a smoking gun. It’s inconsistent.”
Whatever Patterson is doing, it’s doing it right: most companies on the list are new or have appeared only once or twice before. Patterson has shown up in 2009, 2012, 2013, and 2014 (no list was published in 2011).
Lauren Burns is the editor of Proofs magazine and the email newsletters RDH Graduate and Proofs. She is currently based out of New York City. Follow her on Twitter: @ellekeid.